OPEC Concerned Over U.S. Housing Market, Mortgage Lending
The fallout from the current bad credit home loan meltdown is extending far beyond the borders of the United States of America.
The Organization of Petroleum Exporting Countries (OPEC) is concerned about the impact of a slowing U.S. housing market on the nation’s economic growth - as it is the world’s largest consumer of oil.
A senior OPEC official said Wednesday:
“There is very much concern about whether problems in the U.S. housing market become more widespread. This issue with the U.S. subprime [bad credit mortgage] market could get bigger and have bigger, macroeconomic impact.”
Wall Street stocks chalked up their second-biggest point drop in four years Tuesday, rattling already nervous markets worldwide, amid concerns about defaults and delinquencies in the mortgage market.
Specifically, the sector of the market catering to riskier borrowers.
Amid the turmoil, many American subprime lenders have been having problems obtaining the short-term lending facilities needed to finance mortgages.
OPEC ministers gathering for a meeting in Vienna, Austria, on Thursday have been generally downplaying concerns about the stock market volatility.
However, some have aired worries about the potential fallout on economic growth. The official quotes above also said that OPEC was less bullish on global oil demand than the Paris-based International Energy Agency and other forecasters.
“We’re expecting growth of 1.2-1.3 million barrels a day in oil demand (growth),” he said, noting that the IEA is forecasting “over 2 million barrels per day.”
“There are more questions today than when we met in December about the strength of consumption,” the senior OPEC official said in an interview.
“Based on the meetings we’ve been having, I think demand is the number one topic on people’s minds,” he said.
Amid myriad U.S. mortgage loan concerns, OPEC ministers are gathering in Vienna for their first meeting of the year and are expected to hold production steady, despite a swift decline in global oil inventory.
SOURCE: Boston Globe